Preface

The Local Government (Financial Assistance) Act 1995
requires that the Minister report to Parliament on the operation
of the Act 'as soon as practicable' after 30 June each year.

This annual report to Parliament must include an assessment
of:

the extent to which allocation of financial assistance grants
has been made on a full horizontal equalisation basis

the methods local government grants commissions used in making
their recommendations the performance by local governing bodies of
their functions including:

their efficiency

services provided by them to Aboriginal and Torres Strait
Islander communities.

Submitting an annual report to Parliament seeks to achieve two of
the government's goals in relation to the arrangements under the
Act. They are:

to increase States' transparency and accountability in
allocating the Australian Government's grants to local governing
bodies

to promote consistency in the methods by which grants are
allocated to achieve equitable levels of services by local
governing bodies.

Reporting on local governing bodies' performance helps to assess
whether two of the Act's purposes are being achieved. These purposes
are:

to improve the efficiency and effectiveness of local
government

to improve the provision by local governing bodies of services
to Aboriginal and Torres Strait Islander communities.

The report covers all local governing bodies in receipt of grants
under the Act. It fosters transparency and accountability by
enabling an interstate and an intrastate comparison of the
allocation of grants to local governing bodies.

Chapter 1 provides a comprehensive overview of local governance
in Australia, including its roles, functions, size and diversity,
finances and governance arrangements.

Chapter 2 provides an overview of current arrangements, including
the process and principles of apportioning funding between the
States and between local governing bodies within a State. Appendix D
sets out the financial outcomes for all local governing bodies in
receipt of grants. The classification system used in Appendix D to
group similar local governing bodies is described in Appendix F.

The National Principles for allocating general purpose and local
road grants is at Appendix A, and the methodologies each State
adopted in allocating funding to local governing bodies are
summarised at Appendix B. Appendix C provides a comparison of the
distribution models the States and Northern Territory Grants
Commissions used. The grant outcomes for each council in 2003-04 is
at Appendix D, while Appendix E shows the ranking of local governing
bodies within a State on a relative needs basis.

Local government performance is discussed in Chapter 3, which
reports on State developments, Australian Government activities to
support local government performance improvement

and updates reforms and the application of the National
Competition Policy. State reports on performance and reform are at
Appendix G. Improved performance of local governing bodies continues
to be promoted through the National Awards for Local Government. The
2004 Award winners are listed in Appendix I.

Chapter 4 addresses infrastructure issues and has a bearing on
the efficiency and effectiveness aspects of local government
performance.

A report on the delivery of local government services to
Aboriginal and Torres Strait Islander people is in Chapter 5 and the
reports from the States are at Appendix H. Also included in Appendix
H are reports from the States (except for New South Wales) and the
Northern Territory on access by discrete Indigenous communities to
local government services.

This year Chapter 6 examines the issue of the ageing of the
population and the likely impact this will have on local governments
in the future. And Chapter 7 provides information on local
government operation and performance in Germany.